…cont’d

According to Lisa Callaghan, assistant vice-president, product development, group benefits, with Sun Life Financial, the way plan sponsors view biologic drugs is based on a number of factors including their funding arrangement, which impacts how plan risk is managed. In administrative services only (ASO) plans, plan sponsors are responsible for all of the financial risk upfront. Given that ASO plans tend to be adopted by larger employers, they may be in a better position to absorb an isolated catastrophic biologic drug claim than smaller organizations. Smaller clients often adopt insured drug plans, which provide a level of protection against the immediate financial impact of a single catastrophic claim. However, premiums will likely reflect increasing drug costs over time.

While biologics have the potential to offer significant clinical value, Sun Life Financial, like many others, is looking cautiously at the potential impact of biologics on drug plans. “The funding of biologics through private plans is a complex issue that lacks a simple answer,” Callaghan adds. “The potential for improved health and quality of life must be balanced against the impact of substantially higher costs on the sustainability of private plans.”

The Facts on Subsequent Entry Biologics

• Subsequent entry biologics (SEBs) are biologic drugs that enter the market subsequent to, and similar to, innovator products authorized for sale in Canada.

• SEBs are not “generic biologics”—many characteristics associated
with the authorization process and marketed use for generic pharmaceutical drugs do not apply to them.

• Authorization of a SEB in Canada is not a declaration of pharmaceutical and/or therapeutic equivalence or an indication that the product may be automatically substituted with its reference biologic product.

• The principles and procedures for the authorization of generic pharmaceutical drugs are unacceptable for biologic drugs. Along with a full complement of quality information, some original non-clinical and clinical data are required to support a SEB application.

• This will impact the cost of developing the SEB. As a result, SEBs likely won’t generate the same savings associated with the introduction of traditional generic drugs.

Tools for Drug Plan Management
Although plan sponsors may not be able to avoid biologic drug claims, they can implement programs to better manage them. The first step is to ensure that biologic therapies are being used appropriately.

While patients on biologics are typically under the care of a specialist who is well trained to treat the related conditions, drug plans can still implement criteria to ensure that patients are receiving evidence-based treatment (using drugs as approved by Health Canada based on established clinical guidelines). This may require forms to be completed by a physician and reviewed by the insurer or PBM. On the surface, this may seem like an administrative burden; however, there may be an opportunity for some savings by ensuring that the right patients are getting access to medications.

Clients can elect managed or tiered formularies as a means of helping to control the impact of potential catastrophic claims. Plan sponsors recognize that by covering only certain drugs through the formulary, they are potentially affecting the member’s ability and desire to fill a physician’s prescription that is not covered under the plan. While some plan sponsors elect to implement prior authorization for certain drugs, they must evaluate the potential cost savings versus the impact of the strategy on plan administration and employee relations. It is still the norm for plan sponsors to choose open formularies; therefore, they often rely on other drug plan management tools to manage costs without limiting access to medications.

Green Shield Canada has taken a more aggressive approach to managing biologic drugs. Sal Cimino, manager, pharmacy and professional services, and his team did a thorough review of the biologic drug class in 2008 and moved to a tiered reimbursement model, in which certain biologic therapies must be used as first-line therapy based on their cost and effectiveness. Every biologic claim is subject to prior authorization to ensure that the plan member uses biologic medications in the recommended sequence. This model ensures that the most cost-effective medications are tried first; then, if the patient is intolerant or fails on the preferred therapy, he or she can move to alternative medications. Green Shield Canada hopes to conduct a study of this plan design in 2010 to determine the savings and impact on plan sponsors.

In the U.S., where plan sponsors are also responsible for the healthcare costs of their plan members, there is significant growth in the area of therapy management. The U.S. PBM Medco and its subsidiary, Accredo (a specialty pharmacy), offer programs to plan sponsors to support members who are receiving specialty or biologic medications. Because of the complexities in administration, dosing and follow-up, these plan members require significantly more service and support than those taking traditional medications.

A team of specialized pharmacists and nurses is trained in the medications used to treat specific conditions, providing plan members with specialized support, training and mentoring beyond retail dispensing of medications. Through follow-up calls and monitoring, these professionals ensure that plan members are using the medications effectively and completing tests as required, encouraging adherence to optimize the plan sponsor’s investment in the drug and the plan member’s improved health.

Although these programs are emerging in Canada, there has been very little uptake in this area by Canadian private drug plan sponsors. But as their investment in specialty and biologic drugs grows, they may want to consider these programs to ensure that their investment is being managed effectively.

Regardless of the type of plan sponsor or drug plan, everyone agrees that biologic drugs have had—and will continue to have—a significant impact on private drug plans. Not only have they improved the health of many plan members, but they require plan sponsors to take a closer look at their drug plans and carefully consider what kind of coverage and protection they want to provide. BC

Suzanne Lepage is a private health plan strategist in Kitchener, Ont.
suzanne@suzannelepage.ca


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© Copyright 2010 Rogers Publishing Ltd. This article first appeared in the February 2010 edition of BENEFITS CANADA magazine.